Senate strikes credit card bill compromise

WASHINGTON, May 12 (UPI) -- Top Senate Banking Committee members reached a compromise on a bill that would protect U.S. consumers from abusive credit card industry practices.

The agreement increases the chances that the Senate will consider the legislation, possibly this week, The Washington Post reported Tuesday. The compromise was struck during the weekend between committee chairman, Sens. Christopher Dodd, D-Conn., and Richard Shelby, R-Ala., the committee's ranking Republican.

The compromise bill would allow card issuers to retroactively increase rates for a borrower who is 60 days behind in payments. However, if a borrower pays on time for six months after the rate hike, the card issuer would have to restore the original rate. The bill also would bar issuers from raising rates during the first year a credit card account is opened and would require issuers to get customers' permission to set up accounts to allow transactions over the limit can be processed. The compromise also would require card issuers to post credit card agreements online.

"It's a meaningful compromise that will significantly improve the credit card marketplace and stop abusive practices," Travis B. Plunkett, legislative director of the Consumer Federation of America, told the Post.

The banking industry has said such changes would force financial institutions to restrict lending, or raise rates and fees, because the cost of doing business would rise.

The House already passed its version of the credit card legislation.